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Export Market Development Grants Legislation Amendment Bill 2020

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2019-2020

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

 

 

HOUSE OF REPRESENTATIVES

 

 

 

EXPORT MARKET DEVELOPMENT GRANTS LEGISLATION AMENDMENT BILL 2020

 

 

 

 

 

ADDENDUM TO THE EXPLANATORY MEMORANDUM

 

 

 

 

 

(Circulated by authority of the Minister for Trade, Tourism and Investment, Senator the Hon Simon Birmingham)

 

 



 

Export Market Development Grants Legislation Amendment Bill 2020

The purpose of this addendum is to provide additional material to the Explanatory Memorandum to the Export Market Development Grants Legislation Amendment Bill 2020. This addendum responds to concerns raised by the Senate Standing Committee for the Scrutiny of Bills in Scrutiny Digest No. 17 of 2020 (2 December 2020).

 

General Outline

After the final paragraph of the General Outline on page 3 immediately preceding the heading Financial Impact Statement, insert the following paragraphs:

While the Bill creates a framework Act, the Bill also details core elements of the reoriented EMDG program. For example, the new section 15 lists most of the eligible persons for the EMDG program, capturing all of the different legal entities exporting businesses operating in Australia use. In addition, the new section 15 provides for eligible kinds of persons to be prescribed in the Rules to ensure the Minister can include those eligible persons operating outside traditional exporting business structures, such as bodies that represent industry, as well as ensuring new business structures can be added if they arise.

As stated above, this Bill establishes the policy principles of the EMDG program. This Bill also provides for the Rules to prescribe a range of matters which operationalise those core principles, including:

a)       the definition of ready to export

b)       the terms and conditions of a grant

c)        requirements in relation to the payment of a grant or instalment

d)       eligible kinds of persons for a grant

e)       conditions for eligible persons

f)        eligible products for a grant

g)       eligible expenses of a person, and

h)       the methods for calculating the amount of a grant.

These matters are purely operational and are not appropriate to be included in primary legislation as explained below.

(a) Definition of ready to export

The term 'export' is defined in this Bill at Schedule 1, Item 4. Understanding a person's readiness to undertake the exporting is an operational matter relating to the grant application assessment processes. It will consider things like training undertaken or plans which will demonstrate an exporter's readiness.

(b) Terms and conditions of a grant

The ability to make Rules in relation to the terms and conditions for grants operationalises the grant agreement. The EMDG program will rely on other relevant Commonwealth legal requirements in relation to grant administration where possible, and not seek to duplicate them in the EMDG Act. This includes the terms and conditions for grant agreements.  As appropriate, the EMDG program will rely on the terms and conditions for all Commonwealth grants as provided by the Department of Finance and publicly available through the Department's website. Should the need arise to include a specific term or condition for the EMDG program in the Rules, this Bill provides the power for the Minister to do so.

(c) Requirements in relation to the payment of a grant or instalment

The method for calculating the amount of a grant enables the total appropriation for the EMDG program to be managed, along with the upper limits for the different types of grants. This is an ongoing operational matter. In ongoing Commonwealth grant programs the upper limit of a grant is a clear operational question that changes in response to a variety of factors, such as inflation and the cost of doing business overseas. These factors vary frequently. Including such an operational matter in primary legislation would require frequent amendments to the Act.

(d) Eligible kinds of persons for a grant

The conditions applicants must also satisfy to be eligible for a grant (new section 16) are part of the operational details of the EMDG program that underpin program administration. As outlined in the below, these may include requirements like having an Australian Business Number, not being under insolvency administration, or not having received an EMDG grant for a total of eight or more years.

(e) Eligible products for a grant

The Bill outlines the core requirements for eligible products being:

a)       They must be products in the ordinary sense of the word, that is a thing to be sold; and

b)       They must be of substantially Australian origin (new subsection 17(3)).

The Rules will prescribe in detail what products are eligible including goods, services and intellectual property, providing a responsive mechanism to evolving products and the different ways they can be sold.

(f) Eligible expenses of a person

The Bill appropriately outlines the core requirements for eligible expenses in the new subsection 18(2), which provides they must be:

a)       Expenses of the eligible person; and

b)       In respect of

a.        promotional activities or

b.       training activities; and

a)       Undertaken for the purpose of marketing

a.        eligible products

b.       in foreign countries.

The Rules will provide detail of those requirements, for example, that promotional activities can include activities such as website development, trips overseas by marketing teams, and market research. The Rules also provide a responsive mechanism to prescribe new tools for marketing and promotion as they arise.

Schedule 2, Item 10, page 13

At the end of item 10 on page 13, immediately preceding the heading Item 13, insert the following paragraphs:

Decisions made by the CEO of Austrade under the new section 102 are not reviewable by the Administrative Appeals Tribunal. At Chapter 3 of the Administrative Review Council's (ARC) guidance document, "What Decisions Should Be Subject to Merit Review?" (the ARC's guidance document), the ARC sets out decisions that are generally unsuitable for merits review. At paragraphs 3.8 to 3.12, the ARC discusses automatic or mandatory decisions. The decisions contained in subsections 102(3) and 102(6) of the Bill are mandatory decisions. These new subsections require the CEO not to pay the grant or instalment if the grantee has failed to provide information, documents or statements requested within a specified timeframe. There is therefore a statutory obligation for the CEO to act in a certain way. Effectively, there are no merits to consider with respect to the decision.

This mandatory decision follows other decisions that have an element of discretion, as discussed above. They include the decision of the CEO to issue a notice requiring the provision of information or statements (new subsections 102(1) and 102(4)), and then a decision whether to agree to a later date (new subsection 102(3)(b)) or agree to other arrangements for the provision of the statement (new subsection 102(6)(b)). However, these types of decisions should be regarded as preliminary or procedural decisions, as referred to at paragraphs 4.3 to 4.7 of the ARC's guidance document. They lead to, or facilitate, the making of a substantive decision. The substantive decision is to not pay the grant or an instalment, and if the grantee has provided information or statements within the requested timeframes, the decision not to pay does not automatically follow.

Paragraphs 4.6 and 4.7 of the ARC's guidance document refers to refusals to grant extensions of time. However, this is with reference to statutory deadlines. The new section 102 does not contain any statutory deadlines. Rather, any deadlines are set by the CEO at the time of issuing the notice. The issue of the notice is a preliminary or procedural step which may or may not lead to the substantive decision.

As referred to by the ARC at paragraph 4.7, a refusal to grant an extension of time (putting aside that the deadlines in the new section 102 are not statutory), would likely affect a grantee's rights. However, decisions allocating finite resources between competing applicants are also considered unsuitable for merits review (see paragraphs 4.11 to 4.19 of the ARC's guidance document). Although the decisions in the new section 102 may relate to the ongoing management of a grant to the extent it may result in the non-payment of an instalment, they also relate to decisions to require further information or statements to inform the decision to pay the grant. In circumstances where there may be a number of entities competing for, or accessing, the same finite pool of funding, it would not be suitable to have a decision not to pay the grant to an applicant who has failed to provide requested information or statements subject to merits review. Other applicants who have complied with requests may have already received the grant, and any latter review decision overturning a refusal decision may not be able to be implemented if the funding resources are already allocated to other applicants.